What economic field of study explores the problems associated with a firm that arise from a separation of ownership and control and devises ways to resolve them?

Question

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Agency theory is the economic field of study that explores the issues that come up when a firm's personnel managing the firm (the "agents") do not act in the best interest of the owners (the "principals"). This separation of ownership and control can cause problems, such as managers pursuing their own personal interests over the interests of the company's owners. Agency theory devises ways to resolve these conflicts, such as executive compensation plans that incentivize managers to act in the best interest of the firm's owners. The other choices, futures and options, foreign direct investment, and franchising, do not specifically pertain to the problems that arise from a separation of ownership and control.

What Economic Field of Study Explores the Problems Associated with a Firm